A strategic competitor is showing interest in our business, but their initial offer is based on the same standard financial multiple that local private equity groups are offering. How do we force them to price in the strategic synergies they will capture?

Question

Tyler Smith · Accepted Answer

A strategic buyer should pay a premium because they can scale your business faster and eliminate redundant costs. If they offer a standard financial multiple, they are keeping all the synergy value for themselves.

To force them to pay for these synergies, you must quantify them using the IVS 105 Market and Income approaches. Identify the exact cost duplications they will eliminate post-close, such as duplicate software, real estate, or administrative roles.

Next, calculate the revenue synergies. Show how their massive sales force can cross-sell your proprietary products to their existing customer base. Build a detailed operational model that presents this combined future state.

Use your EOS V/TO® to show your strategic growth plan and prove you do not need to sell. Your willingness to walk away is your greatest leverage. If you can show that your business is on track to hit its long-term targets independently, the strategic buyer must pay a premium to acquire your momentum.

Run a Thinking Time session to map out their specific strategic weaknesses. Ask how your technology or team solves their biggest operational bottleneck. Presenting your business as their missing puzzle piece forces them to price in the strategic premium.